organization stucture

PRESENTED BY:AVANI JUVEKAR (14)

BHUSHAN SADAPHULE (26)

Organizational Structure in Global Corporations

Organizational Structure

Organizational Structure is defined by the formal structure, coordination and control systems, and the organization culture.

It’s the formal arrangement of roles, responsibilities and relationships within an organization.

It’s a powerful tool with which to implement strategy.

Vertical Differentiation: Centralization V/S Decentralization.

Vertical Integration: The issue of determining where in the hierarchy, the authority to make decisions stand.

Centralization is the degree to which high level managers, usually above the country level, make strategic decisions and pass them over to lower levels for implementation.

Decisions made at foreign subsidiary level are considered decentralized, and those made at HQ are considered to be centralized.

Centralization

Advantages • Engender common culture and values

• Reduces the risk of making wrong decisions at low level• Realize cost savings from economies of scale

Disadvantages• People fail to coordinate with other departments• Discourages initiative among lower – level employees

Centralized Organization Structure

Managing

Director

HR Manager

Marketing

Manager

Staff Staff Staff

FinanceManager

Decentralization

Advantages • Stable environments do not require frequent intervention by the CEO to reap coordination benefits• Offer close proximity between business lines and markets• Motivates employees to exercise initiativeDisadvantages• Looser controls yield riskier decision-making• Duplication of functions

Decentralized Organizational Structure

CEO

BU 1

Marketing HR

BU 2

Marketing HR

Horizontal Differentiation: The Design of the Formal Structure

Horizontal Differentiation: The way a co. designs its formal structure to perform the following functions;

1. Specify the set of organizational tasks.2. Divide these tasks into jobs, departments,

subsidiaries and divisions to get the work done.

3. Assign authority relationships to get the work done in a way that supports co. strategy.

Types of Organizational Structures

1. Functional Structure2. International Division Structure3. Product Division Structure4. Geographic (Area) Division Structure5. Matrix Division Structure

1. Functional Structure

Specialized jobs are grouped according to traditional business functions.

Ideal for Co. having a narrow product line, sharing similar technology.

Helps maximize economies of scale

Highly efficient.

CEO

Production

India USA

Marketing

India USA

International Division Structure

International division structures A structural arrangement that handles all

international operations out of a division created for this purpose Assures that international focus receives top

management attention Unified approach to international operations Often adopted by firms still in the

developmental states of international business operations

Separates domestic from international managers (not good)

May find it difficult to think and act strategically, or to allocate resources on a global basis

International Division Structure

Chief Executive Officer

Human Resource

sFinance

Marketing

Production

Domestic Division:Plant

Domestic Division:Tools

Domestic Division:Hardware

Domestic Division:Furniture

International Division:

Government

RelationsMarketing

Office Operations

Home-office departments

Operating divisions

(Partial Organization Chart)

Japan ItalyAustrali

a

Global Product Division Structure

Global product division A structural arrangement in which domestic divisions

are given worldwide responsibility for product groups Global product divisions operate as profit centers Helps manage product, technology, customer diversity Ability to cater to local needs Marketing, production and finance can be coordinated

on a product-by-product global basis Division manager may pursue currently attractive

geographic prospects and neglect others with long-term potential

Division managers my spend too much time tapping local rather than international markets

See example next slide

Global Product Division

Human Resource

sFinance

Marketing

Production


Operating divisions


Product Division A

Product Division B

Product Division C

Product Division D

Product Division E

Africa EuropeS.

AmericaAustralia Far East

Great BritainFranceGermanyItalyNetherlands

FinanceMarketingProduction Human Resources


Global Area Division

Global area division A structure under which global operations are

organized on a geographic rather than a product basis International operations are put on the same level as

domestic operations Global division managers are responsible for all business

operations in their designated geographic area Often used by firms in mature businesses with narrow

product lines By manufacturing in a region, the firm is able to reduce

cost per unit and price competitively Difficult to reconcile a product emphasis with a

geographic orientation New R&D efforts often ignored because divisions are

selling in mature marketSee example next slide

Global Area Division

Human Resource

sFinance

Marketing

Production


Operating divisions


North America

South America

Europe Asia Africa

Great BritainFranceGermanyItalyNetherlands


Global Functional Division

Global functional division A structure that organizes worldwide operations

primarily based on function and secondarily on product Approach not used except by extractive companies such

as oil and mining firms Favored only by firms that need tight, centralized

coordination and control of integrated production processes and firms involved in transporting products and raw materials between geographic areas

Emphasizes functional expertise, centralized control, and relatively lean managerial staff

Coordination of manufacturing and marketing often is difficult

Managing multiple product lines can be very challenging because of the separation of production and marketing into different departmentsSee example next slide

Global Functional Division


Marketing

FinanceProductio

n


Domestic Production

Product AProduct BProduct CProduct D

Foreign Production


Domestic Production


Foreign Production


Matrix Organizational Structures

Matrix organizational structures A structure that is a combination of a global product,

area, or functional arrangement Allows the organization to create the specific type of

design that best meets its needs As the matrix design’s complexity increases,

coordinating the personnel and getting everyone to work toward common goals often become difficult

Too many groups go their own way


Matrix Organizational Structures


Operating divisions


North America

Industrial Goods

Europe

Human Resource

sFinance

Marketing

Production


Manager, Industrial

GoodsNorth

America

Manager, Industrial

GoodsEurope

Transnational Network Structures

Transnational network structures A multinational structural arrangement that combines

elements of function, product, and geographic designs, while relying on a network arrangement to link worldwide subsidiaries At the center of the transnational network structure are

nodes, which are units charged with coordinating product, functional, and geographic information

Different product line units and geographical area units have different structures depending on what is best for their particular operations


Transnational Network Structures

Organizational Structure of HTC

“The organizational structure is really that a centipede walks on hundred legs and one or two don't count. So if I lose one or two legs, the process will go on, the organization will go on, the growth

will go on.” -Mukesh Ambani

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organization stucture

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